Case Update: Another company’s retrenchment of employees due to COVID-19/MCO deemed unfair by Industrial Court

In this Case Update series, I share summaries of recent Malaysian court decisions to explore the current approach taken by the courts when deciding on employment-related issues. You can find all the posts in the series by clicking here, including case updates on other legal areas by TheMalaysianLawyer co-founder Lee Shih.

There was a very sharp rise in retrenchment numbers in Malaysia in 2020, particularly in the aftermath of the first Movement Control Order (MCO), which started in March 2020. We are now seeing Industrial Court decisions as a result of unfair dismissal complaints lodged by employees who had their employment terminated in the first half of 2020, and I expect we will continue to see a steady succession of these decisions in the coming months.

As I have often explained, while employers are legally entitled to dismiss employees where the retrenchment is for genuine reasons, employers must be able to show that the termination was not improperly motivated. I recently highlighted one case where the Industrial Court decided that the retrenchment of an employee, which the employer said was due to the challenges caused by the COVID-19 pandemic, was an unfair dismissal: “Case Update: Industrial Court finds retrenchment due to effects of COVID-19/MCO was unfair”.

In this article, I summarise four recent awards involving retrenchments carried out at the same time by the same employer, which the employer said was due to the effects of the MCO and pandemic:

  1. Mohamad Sahrul Bin Kahulan v. Lourdes Medical Services Sdn Bhd (Award No. 1295 of 2021).
  2. Gawri A/P Muthadakan v. Lourdes Medical Services Sdn Bhd (Award No. 1296 of 2021).
  3. Lalitha A/P Subramaniam v. Lourdes Medical Services Sdn Bhd (Award No. 1297 of 2021).
  4. Rasalechumi A/P Kanagaratnam v. Lourdes Medical Services Sdn Bhd (Award No. 1298 of 2021).
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Is it legal for Malaysian employers to make vaccinations mandatory for employees?

The COVID-19 pandemic has brought up seemingly endless unique legal challenges for businesses and employers for the past 18 months, and counting. Beginning with lockdown and restrictions, remote working, paycuts, retrenchments and reorganisations, businesses in Malaysia and many other jurisdictions are now focusing on reopening, and hopefully moving into a post-pandemic future.

In recent weeks, we have been reading about the issue of mandating vaccines for employees. The legality of so-called “no jab no job” policies continues to be debated in major jurisdictions such as the UK, US, and Europe, where the reopening of the economy is at a more advanced stage than Malaysia, and where many companies have been implementing mandatory vaccination policies. Multinational companies with a Malaysian presence are now looking to roll out those policies in their Malaysian offices too. However, the law can be very different across jurisdictions, and employers will need to tread with caution and consider not just the legal but practical repercussions before making vaccinations mandatory for their employees.

In this article, I set out the legal position on this issue, and the key issues employers need to consider. I’ve also previously shared some of my views on this with The Malay Mail in their piece earlier this month — “Can Malaysian employers make Covid-19 vaccinations mandatory for their staff? Lawyers explain.”

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Case Update: Industrial Court finds retrenchment due to effects of COVID-19/MCO was unfair

In this Case Update series, I share summaries of recent Malaysian court decisions to explore the current approach taken by the courts when deciding on employment-related issues. You can find all the posts in the series by clicking here, including case updates on other legal areas by TheMalaysianLawyer co-founder Lee Shih.

The Industrial Court recently decided that the retrenchment of an employee, which the employer said was due to the challenges caused by the COVID-19 pandemic, was an unfair dismissal. This decision shows that, while the courts will uphold genuine retrenchments as an option available to employers to ensure the financial viability and survival of their businesses, employers cannot simply cite the pandemic as an excuse to retrench employees without proper justification.

The award in Joseph Lim Chien Shiuh v. DTTLT Sdn Bhd (Award No. 1052 of 2021) dated 19 May 2021 should serve as a cautionary tale for employers. I expect we will see many more employees successfully challenging terminations carried out in 2020 and 2021 by businesses claiming to have been affected by the various lockdowns or Movement Control Orders (MCOs) and related restrictions.

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